Correlation Between WD-40 CO and JCDecaux

Can any of the company-specific risk be diversified away by investing in both WD-40 CO and JCDecaux at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining WD-40 CO and JCDecaux into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WD 40 CO and JCDecaux SA, you can compare the effects of market volatilities on WD-40 CO and JCDecaux and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in WD-40 CO with a short position of JCDecaux. Check out your portfolio center. Please also check ongoing floating volatility patterns of WD-40 CO and JCDecaux.

Diversification Opportunities for WD-40 CO and JCDecaux

-0.62

Correlation Coefficient

WD-40 CO  JCDecaux

Excellent diversification

The 3 months correlation between WD-40 and JCDecaux is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding WD 40 CO and JCDecaux SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCDecaux SA and WD-40 CO is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on WD 40 CO are associated (or correlated) with JCDecaux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCDecaux SA has no effect on the direction of WD-40 CO i.e., WD-40 CO and JCDecaux go up and down completely randomly.

Pair Corralation between WD-40 CO and JCDecaux

Assuming the 90 days trading horizon WD 40 CO is expected to generate 0.89 times more return on investment than JCDecaux. However, WD 40 CO is 1.12 times less risky than JCDecaux. It trades about 0.0 of its potential returns per unit of risk. JCDecaux SA is currently generating about -0.14 per unit of risk. If you would invest  23,515  in WD 40 CO on October 13, 2024 and sell it today you would lose (315.00) from holding WD 40 CO or give up 1.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

WD 40 CO  vs.  JCDecaux SA

WD 40 CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WD 40 CO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WD-40 CO is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

JCDecaux SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JCDecaux SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with WD-40 CO and JCDecaux

The main advantage of trading using opposite WD-40 CO and JCDecaux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WD-40 CO position performs unexpectedly, JCDecaux can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in JCDecaux will offset losses from the drop in JCDecaux's long position.

The idea behind WD 40 CO and JCDecaux SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.